INTRODUCTION TO MACROECONOMICS, THE DATA. The Variables of Interest to Macroeconomists
|
|
- Ethelbert Laurence Mills
- 6 years ago
- Views:
Transcription
1 INTRODUCTION TO MACROECONOMICS, THE DATA The Variables of Interest to Macroeconomists A stock variable is a variable measurable at one particular time and represents a quantity accumulated in the past (ex: wealth); whereas, A ow variable is measured over an interval of time (ex: income) National Accounts measures the economic activity of a nation. 1
2 Gross Domestic Product (GDP) is one of the national accounts. It is a ow variable and it measures the (before tax) market value of economic output produced within the borders of a country in a year (or quarter) What do we understand from economic output? It is (physical) goods and (intangible) services GDP per capita (person) is obtained when total GDP is divided by the resident population, and it is an important indicator for the well being of an economy 2
3 How is GDP calculated? Production (output) approach: GDP is the summation of the price of goods and services times their amounts Expenditure approach: Things are produced for sale. Thus, the GDP can also be calculated as the total amount of expenditure on these goods and services Income approach: When people buy goods, the money spent on these goods does not leave the economy but it is distributed among the factors of production. It is distributed as salary for workers, rent for capital owners, and the rest stays as corporate income. Therefore, 3
4 GDP is also equal to the total income within the economy As it is seen, the production of goods and services generates an equal value of total income. Hence, GDP is the total income of a country Notice that only if you contribute to the production of the goods in an economy, then you may have an income 4
5 Q: How can we add government to the above model? A: To meet its expenditures, the government should use taxes If governments put taxes on capital or labor, it a ects people s decisions on how much capital to rent or how much to work. This tax lowers people s incentive to work or accumulate capital. The amount of factors of production changes, so does the GDP. This way a government can distort the economy Note that in a simpli ed version of a capitalist economy, we assume government does not involve in production activities 5
6 Q: Suppose some goods are not sold in the year they are produced. How can we calculate GDP in this case? A: We treat those goods as if they are bought by the company itself. The company puts these goods in its inventories to be sold in the coming years. This transaction enters the company s account both as an income and an expenditure. GDP increases. However, if that good is not a durable one (e.g., bread), it is not included in the GDP. In such a case labor earns wage income, but the amount is reduced from producer income 6
7 Q: What is value added way of calculating GDP by production approach? Production of many outputs requires the use of inputs, for instance tires are necessary to produce cars. In calculating GDP, we either count the value of car (final goods approach), or take the value of tires, and combine it the value of car without the tires (value added approach). Thus, value added is the amount by which the value of goods or services are increased in each stage of its production 7
8 In calculating the GDP, three approaches are nearly substitutable (although there can be small statistical discrepancies). But in economic analysis, each gives us di erent insights: If we are interested in how total income is distributed among the factors of production that is, income shares (in GDP) of labor and capital, we may be interested in the Income Approach. If we are interested in questions related to the supply side of the economy (What are the contribution of factors of production to the GDP?), we may use the Production Approach. 8
9 If we are interested in the demand side of the economy (e.g. how much governments and consumers save and how much they consume?), we may refer to the Expenditure Approach (Demand side) 9
10 Expenditure Approach: GDP is usually decomposed into Consumption (C): Private consumption of all (non-)durable goods and services Investment (I): (Non-)residential investment plus change in Inventories Investment does NOT mean individuals purchases of nancial product as we would normally think. Under national accounts buying nancial products is classi ed as saving, NOT investment.) Government Purchases (G): Government s expenditure on goods and services, plus expenditure for infrastruc- 10
11 ture investment or research spending (called government investment,or gross xed capital formation) Net Exports (NX): Exports (X) minus Imports (I) In a closed economy, Exports, Imports,and Net Exports are equal to 0. National Income Accounts Identity Y = C + I + G + NX National Income Accounts Identity in a Closed Economy Y = C + I + G 11
12 A Numerical Example: Suppose there are two producers in an economy: one produces tomatoes and the other produces ketchup. Given the information in Table 1, calculate the GDP of this economy by the approaches outlined above Table 1 Tomate Company ($) Ketchup Company Sales Revenue Productions Costs Wage Payments Input Costs Pro ts
13 Tomate Company ($) Ketchup Company Sales Revenue Productions Costs Wage Payments Input Costs Pro ts (Final Good Approach) GDP=( )+4000=8000$ (Value Added Approach) GDP=(6000-0)+( )=8000$ Expenditure Approach classi es the goods according to by whom expenditure is made (C=8000$) (Income Aproach) GDP=( )+( )=8000$ 13
14 14
15 Note: Housing initially enters as residential investment. Then enters as consumption spending, as people pay rent to live in them. This is expenditure for renters, income for the landlord. If landlord lives in the house by himself, it is treated as he pays rent to itself Case Study: What would be the e ect of the Japanese Earthquake on this country s GDP? In good times, GDP (per capita) is a good to measure of the average well being of the citizens in an economy. However, in bad times, it is not necessarily so 15
16 The quake damaged Japan s existing stock of facilities; hence, Japanese stock of wealth eroded. However, GDP is a ow concept The quake hit an area where considerable production takes place. Hence, GDP would decline due to a possible fall in production But Japanese economy was going through stagnation for decades. Hence, GDP was already below what it would have been under full employment of resources. This is to say there was a large excess supply capacity in Japan. This spare capacity in other parts of the country o set the fall in production in the area hit 16
17 by the quake. Hence, in the short run we do not necessarily observe a decline in GDP Reconstruction costs will be borne by local governments and mostly by the central government, which can collect the money from nancial markets. Thus, national saving goes to government instead of investment. This, in the long run, would decrease the GDP growth rate This public debt will eventually be re ected as higher taxes, leading to decline in the well being of citizens 17
18 Money Supply and Prices: Money Quantity Theory of Suppose 10 identical goods are produced in the economy, and the price of each good is 10 TL. The GDP of this economy is 100 TL Q: How much money do we need in this economy? If the production and sale of the goods occurs at the same point in time, we need 100TL. In this case we say the money in the economy circulates once However, this is not the case in reality. Production of goods in a year does occur in di erent time spans. 18
19 Hence, even a money supply of 20TL in the economy would be enough if there are 5 stages of transactions This gives us the Quantity Theory of Money: If Q is number of goods in the economy, P is the price of goods, M is the money supply, and V is the velocity of money, the following equation always needs to be satis ed Q P = M V 19
20 The Increase in the Money Supply: In ation, Nominal GDP, Real GDP Assume that there are 10 identical good are produced, and the price of each good is 10 TL. The GDP of this economy is 100 TL I assume Central Bank is not independent and the government wants the Central Bank to print 100 TL more. Since the amount of production in an economy is determined by the factors of production (existing labor and capital), the number of goods produced is the same. In this case, by the Quantity Theory of Money, the price of each good should increase to 20 TL 20
21 Since the new money is owned by the government, consumers can now a ord to buy only 5 goods (instead of 10), and the rest of the goods (the remaining 5 goods) are consumed by the government 21
22 We arrive two conclusions 1. In ation, which is %100 here, is a hidden tax (called seigniorage) that enables government to increase its expenditure share without levying direct taxes on consumers 2. Just because GDP increases from 100 TL to 200TL, the economy s well being does not change: there are still 10 goods in the economy to be consumed. Hence, nominal GDP (also called GDP in current prices) is not an appropriate tool to measure the well being of countries. We need create a Quantity Index, which measures the number of goods and services produced in the economy 22
23 Formulas for Calculating Quantity Index We can keep prices xed at a base year (1999 below) and use those prices to weight the quantities produced in different years Real GDP (1999) = (1999 Price of Apples * 1999 Quantity of Apples) + (1999 Price of Computers * 1999 Quantity of Computers) Note that in 1999 Real GDP=Nominal GDP Real GDP (2000) = (1999 Price of Apples * 2000 Quantity of Apples) 23
24 + (1999 Price of Computers * 2000 Quantity of Computers)... This is a quantity index and is called GDP in constant (1999) prices You may compute the same type of index by taking 2000 as the base year. Hence, the level of the Real GDP computed this way is not informative. That is why we index it. In this example we set it equal to 100 in 1999 Changes in quantity indexes give us the Growth in Real GDP 24
25 It can be calculated in a way that Q t = P pb q t P pb q b where b denotes base prices (1999 in the example above) However, there is a problem with this method. As an example, in 2009 computers are cheaper and much more available than in Hence, using their 1999 prices would overestimate the value of computers in year 2009 Accordingly, we develop another quantity index and a stepwise procedure, which we call the Chain-Rule 25
26 Formulas for Calculating Chain-Type Quantity Index The chain-type annual change in Real GDP (Fisher index) takes the geometric mean of two indexes, each measures the change in Real GDP at time t in two adjacent years, one keeps prices xed at t 1, and the other at t Q F t = s P pt 1 q t P pt 1 q t 1 P pt q t P pt q t 1 26
27 Price Indexes Price indexes are used to measure changes in prices. The chain-type price index is s P P Pt F pt q t 1 pt q = P t pt 1 q t 1 P pt 1 q t Consumer Price Index (CPI) (whether it is chain-type or not) measures changes in the price level of consumer goods and services purchased by households 27
28 GDP price de ator (may be called implicit price de ator) gives us the price changes from base year to time t. Unlike CPI, it takes into account all the goods and services in the economy, and it is the ratio nominal gross domestic product to real gross domestic product GDP Deflator F t = P pt q t P pb q t 100 The numerator is the nominal GDP at time t. denominator is the real GDP The 28
29 In practice, the di erence between the de ator and a price index like the Consumer price index (CPI) is often relatively small. On the other hand, governments increasing utilize of price indexes for everything from scal and monetary planning to payments to social program recipients, even small di erences between in ation measures can change budget revenues and expenses by millions or billions of dollars. 29
30 Example: 30
31 Case Study: Turkish GDP and In ation Data Average Yearly Growth Rate Real GDP %4.7 Real GDP per capita %3.4 GDP in billion TL %15 GDP in billion USD %15 Average Yearly Changes in Prices Consumer Price Index %8 GDP De ator %
32 Notes GDP per capita is obtained by dividing total GDP to the resident population, and it is the mean ( rst moment) of the income distribution of individuals. If one is interested in how the total income (GDP) is distributed among citizens, she needs to refer to the variance (second moment) of the income distribution, which is a measure of Income Inequality GDP data is collected quarterly. Annual GDP is the sum of quarterly GDPs 32
33 There is a seasonality e ect on the quarterly GDP data. We do not expect the production to be the same for instance, in winter and summer (for instance heating oil production rises in before the winter heating season). Hence, to calculate GDP growth rate using quarterly data, we should look for 4-quarter growth rates, i.e. compare the Real GDP in any quarter with the corresponding quarter of the previous year. To create an index (which is a level variable) from quarterly data, we should correct the seasonality e ect 33
34 Recessions: Periods of falling Real GDP, severe ones called Depressions Gross National Product (GNP) = GDP + Factor Payments From Abroad - Factor Payments to Abroad Net National Product (NNP) = GNP - Depreciation 34
35 Data Management Turkish Data Go to TCMB web site: choose: English; Data; Statistical Data The US data US Bureau of Economic Analysis: choose: National; National Income and Product Accounts Tables; from a list of All NIPA Tables,... 35
36 Extracts from the TCMB Gross Domestic Product Gayri Safi Yurtici Hasila Final Consumption Expenditure of Resident Households Yerlesik Hanehalklarinin Tuketimi Final Consumption Expenditure of Resident and Non Resident Househo Yerlesik ve Yerlesik Olmayan Hanehalklarinin Yurtici Tuketimi (Less) Final Consumption Expenditure of Non Resident Households on (Eksi) Yerlesik Olmayan Hanehalklarinin Yurtici Tuketimi Final Consumption Expenditure of Resident Households in the Rest of t Yerlesik Hanehalklarinin Yurtdisi Tuketimi Government Final Consumption Expenditure Devletin Nihai Tuketim Harcamalari Compensation of Employees Maas, Ucret Purchases of Goods and Services Mal ve Hizmet Alimlari Gross Fixed Capital Formation Gayri Safi Sabit Sermaye Olusumu Public Sector Kamu Sektoru Machinery Equipment Makine Techizat Construction Insaat Private Sector Ozel Sektor Machinery Equipment Makine Techizat Construction Insaat Change in Stocks Stok Degismeleri Exports of Goods and Services Mal ve Hizmet Ihracati (Less) Imports of Goods and Services (Eksi) Mal ve Hizmet Ithalati 36
37 GSYIH Components: (Cross-Sectional Data) (2010) GSYIH Components: (Time Series Data) 37
38 The importance of seasonal adjustment (see the spikes on the quarterly GDP data shown with the top line) 38
39 Sectoral Decomposition of GDP 39
40 How Economists Think In Economics, we use theoretical models to explain economic processes in the real world. Ex: The model of supply and demand 40
41 Changes in Real GDP are explained in two parts: The (very) long-run (growth) component, and short-run (business cycle) component 41
42 Theory of Economic Growth explains increases in national income decades. Business Cycle Theory explains the uctuations in the data within a period of three months to a couple of years. 42
43 Other Variables of Interest to Macroeconomists Unemployment: Needless to say, it is one of the most important indicators of well being in the economy. If; Number of Employed: E, Number of Unemployed: U, Number of Home Sitting: HS Labor Force: E+U Unemployment Rate: U E+U *100 Labor-Force Participation Rate: E+U E+U+HS *100 43
44 Other important variables Interest Rate (Real Interest Rate= Nominal Interest Rate - In ation) Exchange Rate (A $/TL = 1/A TL/$): Real-Nominal, PPP (Purchasing Power Parity) 44
45 Microeconomic Thinking and Macroeconomic Models Microeconomics is the study of how households and rms make decisions and how these decision makers interact in the marketplace Because economy-wide events arise from the interaction of many households and many rms, macroeconomics and microeconomics are inextricably linked For example, we examine the households decisions regarding how much to consume and how much money to save and the rms decision regarding how much to invest. These individual decisions together form the larger 45
46 macroeconomic picture. The goal of studying these microeconomic decisions in detail is to re ne our understanding of the aggregate economy Sometimes a representative consumer may be all we need to model the economy, but sometimes we use heterogenous agents 46
Chapters 1 & 2 - MACROECONOMICS, THE DATA
TOBB-ETU, Economics Department Macroeconomics I (IKT 233) Ozan Eksi Practice Questions (for Midterm) Chapters 1 & 2 - MACROECONOMICS, THE DATA 1-)... variables are determined within the model (exogenous
More informationEcon COURSE 2 (Chapter 21) MEASURING NATIONAL OUTPUT AND NATIONAL INCOME
COURSE 2 (Chapter 21) MEASURING NATIONAL OUTPUT AND NATIONAL INCOME Outline of today s lecture: 1. Gross Domestic Product 2. Calculating GDP A) Expenditure Approach B) Income Approach C) Output Approach
More informationChapters 1 & 2 - MACROECONOMICS, THE DATA
TOBB-ETU, Economics Department Macroeconomics I (IKT 233) 2017/18 Fall-Ozan Eksi Practice Questions with Answers (for Midterm) Chapters 1 & 2 - MACROECONOMICS, THE DATA 1-)... variables are determined
More information1 Ozan Eksi, TOBB-ETU
1. Business Cycle Theory: The Economy in the Short Run: Prices are sticky. Designed to analyze short-term economic uctuations, happening from month to month or from year to year 2. Classical Theory: The
More informationCHAPTER 2: MEASUREMENT OF MACROECONOMIC VARIABLES
Additional Questions Problems and/or essay questions: CHAPTER 2: MEASUREMENT OF MACROECONOMIC VARIABLES 1. What impact do you think that the movement of women from working in the household to working in
More informationEXPENDITURE APPROACH: The expenditures on all final goods and services made by all sectors of the economy are added to calculate GDP. Expenditures are
Chapter 1 MEASURING GDP AND PRICE LEVEL MEASURING EONOMIC ACTIVITY Macroeconomics studies the aggregate (or total) concept of economic activity. Its focus is on the aggregate output, the aggregate income,
More informationChapter 2: The Data of Macroeconomics
Chapter 2: The Data of Macroeconomics 0 IN THIS CHAPTER, YOU WILL LEARN: the meaning and measurement of the most important macroeconomic statistics:! gross domestic product (GDP)! the consumer price index
More informationECON 1102: MACROECONOMICS 1 Chapter 1: Measuring Macroeconomic Performance, Output and Prices
ECON 1102: MACROECONOMICS 1 Chapter 1: Measuring Macroeconomic Performance, Output and Prices 1.1 Measuring Macroeconomic Performance 1. Rising Living Standards Economic growth is the tendency for output
More informationPART EIGHT: THE DATA OF MACROECONOMICS. Measuring A Nation s Income
ECON 102 Chapter 22 1 PART EIGHT: THE DATA OF MACROECONOMICS Measuring A Nation s Income Chapter 23 What did we learn until now? In the first semester we covered microeconomics Microeconomics is the study
More informationTopic 2: Macroeconomic Data. (chapter 2) revised 9/15/09. CHAPTER 2 The Data of Macroeconomics slide 0
Topic 2: Macroeconomic Data (chapter 2) revised 9/15/09 CHAPTER 2 The Data of Macroeconomics slide 0 Learning objectives In this chapter, you will learn about how we define and measure: Gross Domestic
More information1 Modern Macroeconomics
University of British Columbia Department of Economics, International Finance (Econ 502) Prof. Amartya Lahiri Handout # 1 1 Modern Macroeconomics Modern macroeconomics essentially views the economy of
More informationRecall from Econ 200:
Chapter 2: The Data of Macroeconomics Recall from Econ 200: Macroeconomics is the study of the economy a whole, including growth in incomes, changes in price, and the rate of unemployment. Macroeconomists
More informationPart V: Introduction to Macroeconomics 19. The Wealth of Nations: Defining and
Part V: Introduction to s 19. 20. Aggregate Incomes 1 / 56 Chapter 19 Defining and 2017.8.9. 2 / 56 1 2 3 4 3 / 56 Chapter 19 Q: In the United States, what is the total market value of annual economic
More informationMidterm 1 Practice Multiple Choice Questions
Midterm 1 Practice Multiple Choice Questions 1. To compute the value of GDP: A) goods and services are valued at market prices. B) the sale of used goods is included. C) production for inventory is not
More informationCh 2. National Income Accounting ECO 402
Ch 2. National Income Accounting ECO 402 Key Words The circular flow Three approaches to measuring national income Production Income Expenditure Value added Final goods and intermediate goods Gross domestic
More informationFull file at
ADDITIONAL QUESTIONS Problems and/or Essay Questions: CHAPTER 2: MEASUREMENT OF MACROECONOMIC VARIABLES 1. What impact do you think that the movement of women from working in the household to working in
More informationMacroeconomic Data. Two definitions: In this chapter, you will learn about how we define and measure: Gross Domestic Product
Topic 2: Macroeconomic Data (chapter 2) revised 9/15/09 CHAPTER 2 The Data of Macroeconomics slide 0 Learning objectives In this chapter, you will learn about how we define and measure: Gross Domestic
More informationChapter 1: The Data of Macroeconomics
Chapter 1: The Data of Macroeconomics Econ206 - Francesc Ortega August 31, 2011 Outline 1. The GDP 2. The inflation rate 3. The unemployment rate Reading: Mankiw 7e, chapter 2 Definition The Gross Domestic
More informationIntroduction to Macroeconomics
Week 1: General notes: o Macroeconomics studies the aggregate impact of individual decisions. Microeconomics studies decision-making by individual economic agents o In the study of macroeconomics, an economist
More informationFull file at
MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question 1) Gross domestic product is defined as 1) A) the total market value of the final goods and services
More informationECON 3010 Intermediate Macroeconomics. Chapter 2 The Data of Macroeconomics
ECON 3010 Intermediate Macroeconomics Chapter 2 The Data of Macroeconomics IN THIS CHAPTER, YOU WILL LEARN: the meaning and measurement of the most important macroeconomic statistics: gross domestic product
More informationChapter 2 The Data of Macroeconomics
Chapter 2 The Data of Macroeconomics slide 0 Learning Objectives In this chapter, you will learn about: Gross Domestic Product (GDP) the Consumer Price Index (CPI) the Unemployment Rate slide 1 GROSS DOMESTIC
More informationPrinciples of Macroeconomics Introductory quiz
Principles of Macroeconomics Introductory quiz Academic Program: MSc in Banking and Finance Semester: Fall 2011/12 Instructor: Dr. Nikolaos I. Papanikolaou Office: Luxembourg School of Finance, KB2-E02
More informationChapter 2. Measurement. Teaching Goals. Classroom Discussion Topics
Chapter 2 Measurement Teaching Goals Students must understand the importance of measuring aggregate economic activity. Macroeconomists produce theories that provide useful insights and policy conclusions.
More informationMacroeconomics, 6e (Williamson) Chapter 2 Measurement. 2.1 Multiple-Choice Questions
Macroeconomics, 6e (Williamson) Chapter 2 Measurement 2.1 Multiple-Choice Questions 1) NIPA means A) New Income and Price Accounting. B) National Investment and Productivity Approach. C) Neutral Increase
More informationNotes II: Measuring the Economy
Notes II: Measuring the Economy Julio Garín Intermediate Macroeconomics Spring 2018 Intermediate Macroeconomics Notes II - Measuring the Economy Spring 2018 1 / 72 Preliminaries While the GDP and the rest
More informationA CLOSED ECONOMY. 2-) In a closed economy, Y-C-G equals: a-) national saving. b-) private saving. c-) public saving. d-) nancial saving.
TOBB-ETU, Economics Department Macroeconomics II (IKT 234) Closed and Open Economies in the Medium Run Intro 1 - Practice Questions (Ozan Eksi) A CLOSED ECONOMY 1-) In the classical model with xed output,
More informationEC and MIDTERM EXAM I. March 26, 2015
EC102.03 and 102.05 Spring 2015 Instructions: MIDTERM EXAM I March 26, 2015 NAME: ID #: You have 80 minutes to complete the exam. There will be no extensions. The exam consists of 40 multiple choice questions.
More informationECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 2: NATIONAL INCOME ACCOUNTING
ECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 2: NATIONAL INCOME ACCOUNTING Gustavo Indart Slide1 GROSS DOMESTIC PRODUCT Gross Domestic Product (GDP) is the value of all final goods and services produced
More information"Data, data, data: how can I make bricks without clay?".
1 Measurement As explained in the previous chapter, measurement is a key component of the scientific method and is necessary to develop and validate theories. Sherlock Holmes, one of the masters of (investigative
More informationLearning objectives. Gross Domestic Product
Learning objectives In this chapter, you will learn about: Gross Domestic Product (GDP) the Consumer Price Index (CPI) the Unemployment Rate The Data of Macroeconomics slide 1 Gross Domestic Product Two
More informationMACROECONOMICS. The Data of Macroeconomics MANKIW. In this chapter, you will learn. Gross Domestic Product: Expenditure and Income.
C H A P T E R 2 The Data of Macroeconomics MACROECONOMICS N. GREGORY MANKIW 2008 Worth Publishers, all rights reserved SIXTH EDITION PowerPoint Slides by Ron Cronovich In this chapter, you will learn the
More information(Brown boxes: Economic actors) (Blue boxes: Markets) (Green Lines: Flow of Money)
(Brown boxes: Economic actors) (Blue boxes: Markets) (Green Lines: Flow of Money) 1 Some De nitions There are 3 markets we are interested in: markets for goods and services, markets for labor, and markets
More informationMEASURING NATIONAL OUTPUT AND NATIONAL INCOME. Chapter 18
1 MEASURING NATIONAL OUTPUT AND NATIONAL INCOME Chapter 18 national income and product accounts Data collected and published by the government describing the various components of national income and output
More informationOndřej Krčál Department of Economics
Macroeconomics II Ondřej Krčál Department of Economics Office 611 Consultation hours: Tuesday 16:30 18:00 E-mail: krcalo@mail.muni.cz slide 0 Literature MANKIW, G. (2010): Macroeconomics. 7th edition.
More informationMeasurement. Chapter 2. Topics in Macroeconomics 2. Economics Division University of Southampton. February 8, 2008
Measurement Chapter 2 Topics in Macroeconomics 2 Economics Division University of Southampton February 8, 2008 Chapter 2 1/42 Topics in Macroeconomics Gross Domestic Product Introduction Gross Domestic
More informationChapter 2: The Data of Macroeconomics*
Chapter 2: The Data of Macroeconomics 1/40 *Slides based on Ron Cronovich's slides, adjusted by Marcel Bluhm for lecture in Macroeconomics at the Wang Yanan Institute for Studies in Economics at Xiamen
More informationCHAPTER 2 Measurement
CHAPTER 2 Measurement KEY IDEAS IN THIS CHAPTER 1. Measurements of key macroeconomic variables such as gross domestic product (GDP), the price level, inflation, unemployment, and so on motivate macroeconomists
More informationThe Data of Macroeconomics
C H A P T E R 2 MACROECONOMICS SIXTH EDITION N. GREGORY MANKIW PowerPoint Slides by Ron Cronovich 2008 Worth Publishers, all rights reserved In this chapter, you will learn the meaning and measurement
More informationMeasurement. Chapter 2. Topics in Macroeconomics 2. Economics Division University of Southampton. February 2009
Measurement Chapter 2 Topics in Macroeconomics 2 Economics Division University of Southampton February 2009 Chapter 2 1/45 Topics in Macroeconomics Gross Domestic Product Introduction Gross Domestic Product
More informationmacroeconomics The Data of Macroeconomics N. Gregory Mankiw CHAPTER TWO PowerPoint Slides by Ron Cronovich fifth edition
CHAPTER TWO The Data of Macroeconomics macroeconomics fifth edition N. Gregory Mankiw PowerPoint Slides by Ron Cronovich 2002 Worth Publishers, all rights reserved Learning objectives In this chapter,
More informationfile:///c:/users/moha/desktop/mac8e/new folder (2)/CourseCompas... Creation Settings
1 of 24 12/8/2012 11:32 م COURSES > BA121 > CONTROL PANEL > POOL MANAGER > POOL CANVAS P Add, modify, and remove questions. Select a question type from the Add drop-down list and click Go to add questions.
More informationGross Domestic Product. National Income Determination. Topic 9: 10/7/2016
The Economy s Income and Expenditure Topic 9: National Income Determination When judging whether the economy is doing well or poorly, it is natural to look at the total income that everyone in the economy
More informationWeek 1. H1 Notes ECON10003
Week 1 Some output produced by the government is free. Education is a classic example. This is still viewed as a service and valued at the cost of production which is primarily the salary of the workers
More informationMacroeconomics 6th Edition Williamson SOLUTIONS MANUAL Full download at:
Macroeconomics 6th Edition Williamson SOLUTIONS MANUAL Full download at: Macroeconomics 6th Edition Williamson TEST BANK Full download at: https://testbankreal.com/download/macroeconomics-6th-edition-williamsonsolutions-manual-2/
More informationChapter 6 Measuring National Output and National Income
Chapter 6 Measuring National Output and National Income 1 Multiple Choice 1) The total market value of all final goods and services produced within a given period by factors of production located within
More information8 THE DATA OF MACROECONOMICS
8 THE DATA OF MACROECONOMICS Measuring a Nation s Income 23 Measuring a Nation s Income Microeconomics Microeconomics is the study of how individual households and firms make decisions and how they interact
More informationMacroeconomic Analysis Econ 6022 Level I
1 / 37 Macroeconomic Analysis Econ 6022 Level I Lecture 2 Fall, 2011 2 / 37 Overview Let s start our tour in macroeconomics by introducing a few building blocks, which will be used repeatedly later on.
More informationMacroeconomic Theory and Policy
ECO 209Y Macroeconomic Theory and Policy Lecture 2: National Income Accounting Gustavo Indart Slide1 Gross Domestic Product Gross Domestic Product (GDP) is the value of all final goods and services produced
More informationIntermediate Macroeconomics, Sciences Po, Answer Key to Problem Set 1
Intermediate Macroeconomics, Sciences Po, 2014 Zsófia Bárány Answer Key to Problem Set 1 1. Production and expenditure approaches to GDP: Consider three firms: firm A, a mining enterprise; firm B, a steelmaker;
More informationMacroeconomics Review Course LECTURE NOTES
Macroeconomics Review Course LECTURE NOTES Lorenzo Ferrari frrlnz01@uniroma2.it August 11, 2018 Disclaimer: These notes are for exclusive use of the students of the Macroeconomics Review Course, M.Sc.
More information1. Introduction to Macroeconomics
Fletcher School of Law and Diplomacy, Tufts University 1. Introduction to Macroeconomics E212 Macroeconomics Prof George Alogoskoufis The Scope of Macroeconomics Macroeconomics, deals with the determination
More informationEconomics. The last two weeks...
Economics The last two weeks... Final Exam (Thursday, December 14) Practice tests and review materials on Wednesday Extra Credit Stock Project (due on Thursday, December 14) Today: Measuring Economic Performance
More informationEconomic Performance. Sherif Khalifa. Sherif Khalifa () Economic Performance 1 / 39
Sherif Khalifa Sherif Khalifa () Economic Performance 1 / 39 People earning higher income levels enjoy higher living standards. To judge economic well being, we consider the total income in an economy.
More informationChapter 0: Introduction to macroeconomics
Chapter 0: Introduction to macroeconomics References: Burda & Wyplosz: Macroeconomics 4e, Oxford University Press, Blanchard; Macroeconomics, Prentice Hall. Macroeconomics: a branch of economics that deals
More information1. The economic statistic used to measure the level of prices is: A) GDP. B) CPI. C) GNP. D) real GDP.
1. The economic statistic used to measure the level of prices is: A) GDP. B) CPI. C) GNP. D) real GDP. 2. The statistic used by economists to measure the value of economic output is: A) the CPI. B) GDP.
More informationChapter 2 The Measurement of Income, Prices, and Unemployment
Chapter 2 The Measurement of Income, Prices, and Unemployment Chapter Outline 2-1 Why We Care About Income 2-2 The Circular Flow of Income and Expenditure 2-3 What GDP Is, and What GDP Is Not a. Defining
More information1. The economic statistic used to measure the level of prices is the: A) GDP. B) CPI. C) GNP. D) real GDP.
1. The economic statistic used to measure the level of prices is the: A) GDP. B) CPI. C) GNP. D) real GDP. 2. The statistic used by economists to measure the value of economic output is the: A) CPI. B)
More informationIntroduction to Economics
Introduction to Economics Topic 6 (Macroeconomics): Measuring aggregate production and income Coordinator lecturer: Levi Pérez (lperez@uniovi.es) University of Oviedo (Spain, ES EU) Overview 1. Basic macroeconomic
More informationMEASURING A NATION S INCOME
10 MEASURING A NATION S INCOME LEARNING OBJECTIVES: By the end of this chapter, students should understand: why an economy s total income equals its total expenditure. how gross domestic product (GDP)
More informationTest Yourself: National-Income Accounting
Test Yourself: National-Income Accounting Nothing is more destructive than the gap between people's perceptions of their own day-to-day economic well-being and what politicians and statisticians are telling
More informationWhat is Macroeconomics?
MACRO ECONOMICS 1 What is Macroeconomics? Macroeconomics is the study of the large economy as a whole. It is the study of the big picture. Instead of analyzing one consumer, we analyze everyone. Instead
More informationInterest rates expressed in terms of the national currency (basket of goods ) are called nominal (real) interest rates Their relation is given as
Chapter 14 - Expectations: The Basic Tools Interest rates expressed in terms of the national currency (basket of goods ) are called nominal (real) interest rates Their relation is given as 1 + r t = 1
More informationMacroeconomic Measurement and Business Cycles
Macroeconomic Measurement and Business Cycles Economics 4353 - Intermediate Macroeconomics Aaron Hedlund University of Missouri Fall 2015 Econ 4353 (University of Missouri) Measurement and Business Cycles
More informationMacroeconomic Measurement and Business Cycles
Macroeconomic Measurement and Business Cycles Economics 3307 - Intermediate Macroeconomics Aaron Hedlund Baylor University Fall 2013 Econ 3307 (Baylor University) Measurement and Business Cycles Fall 2013
More informationMeasuring the Nation s Income and Growth
Measuring the Nation s Income and Growth We will examine: GNP vs GDP income and expenditure approaches to measurement real versus Nominal GDP potential GDP what GDP does not measure Art Lightstone Gross
More informationFoundations of Economics for International Business Selected Solutions to Assignment 1
Foundations of Economics for International Business Selected Solutions to Assignment 1 INSTRUCTOR: XIN TANG Department of World Economics Economics and Management School Wuhan University Fall 2015 1 MULTIPLE
More informationGDP and National Accounts
GDP and National Accounts National accounts show technically no recession yeeah! 1of 18 Accounting (I) Some Accounting Definitions A stock variable is measured at one specific time, and represents a quantity
More informationMacroeconomics, 7e (Blanchard) Chapter 2: A Tour of the Book. 2.1 Aggregate Output.
Macroeconomics, 7e (Blanchard) Chapter 2: A Tour of the Book 2.1 Aggregate Output. 1) Fill in the blank for the following: GDP is the value of all produced in a given period. A) final and intermediate
More informationmacro macroeconomics The Data of Macroeconomics N. Gregory Mankiw CHAPTER TWO 6 th edition
macro CHAPTER TWO The Data of Macroeconomics macroeconomics 6 th edition N. Gregory Mankiw Learning objectives In this chapter, you will learn about: Gross Domestic Product (GDP) the Consumer Price Index
More informationWhat is Macroeconomics? Data. Macroeconomics II. Lecture 1: Introduction to Macroeconomics
Lecture 1: Introduction to Macroeconomics What is macroeconomics? What do we study? How do we study it? Macroeconomics: studies the whole economy main variables: real, inflation, unemployment usually dynamic
More informationReview Seminar. Section A
Macroeconomics, Part I Petra Geraats, Easter 2018 Review Seminar Section A 1. Suppose that population and aggregate output in Europia are both growing at a rate of 2 per cent per year. Using the Solow
More informationECON 1000 D. Come to the PASS workshop with your mock exam complete. During the workshop you can work with other students to review your work.
It is most beneficial to you to write this mock midterm UNDER EXAM CONDITIONS. This means: Complete the midterm in 2.5 hours. Work on your own. Keep your notes and textbook closed. Attempt every question.
More informationChapter 5: Production, Income and Employment
Chapter 5: Production, Income and Employment We will take our first look at production and employment, focusing on two key variables: Gross Domestic Product and Unemployment Rate The nation s Gross Domestic
More informationUnemployment Rate = 1. A large number of economic statistics are released regularly. These include the following:
CHAPTER The Data of Macroeconomics Questions for Review 1. GDP measures the total income earned from the production of the new final goods and services in the economy, and it measures the total expenditures
More informationEconomic Growth and Development Prof. Rajashree Bedamatta Department of Humanities and Social Sciences Indian Institute of Technology, Guwahati
Economic Growth and Development Prof. Rajashree Bedamatta Department of Humanities and Social Sciences Indian Institute of Technology, Guwahati Lecture 01 Concepts of Economic Growth Hello and welcome
More informationGOAL #3 PROMOTE ECONOMIC GROWTH
GOAL #3 PROMOTE ECONOMIC GROWTH CH. 12.1 How does a country measure economic growth? 3 How is the economy doing? The Bureau of Economic Analysis collect statistics on production, income, investment, and
More informationNational Income Accounts, GDP and Real GDP. 2Topic
National Income Accounts, GDP and Real GDP 2Topic National Income Accounting According to EconPort (http://www.econport.org/), National income accounting deals with the aggregate measure of the outcome
More informationEcon 311 Intermediate Macroeconomics Professor Eschker. Fall 2014
Econ 311 Intermediate Macroeconomics Professor Eschker Fall 2014 Today s Topics Finish math refresher GDP Deflator Chain Weighting News CBO Projection: Budget Deficits in Future Years to be Smaller than
More informationMacroeconomics Canadian 7th Edition Abel SOLUTIONS MANUAL
Macroeconomics Canadian 7th Edition Abel TEST BANK Full download at: Macroeconomics Canadian 7th Edition Abel SOLUTIONS MANUAL Full download at: https://testbankreal.com/download/macroeconomics-canadian-7th-editionabel-test-bank/
More informationfile:///c:/users/moha/desktop/mac8e/new folder/coursecompass_fi... Creation Settings
file:///c:/users/moha/desktop/mac8e/new folder/coursecompass_fi... COURSES > BA121 > CONTROL PANEL > POOL MANAGER > POOL CANVAS Add, modify, and remove questions. Select a question type from the Add drop-down
More informationChapter 2. The Measurement and Structure of the Canadian Economy. Copyright 2009 Pearson Education Canada
Chapter 2 The Measurement and Structure of the Canadian Economy Copyright 2009 Pearson Education Canada National Income Accounting The national income accounts is an accounting framework used in measuring
More informationChapter 18 - Openness in Goods and Financial Markets
Chapter 18 - Openness in Goods and Financial Markets Openness has three distinct dimensions: 1. Openness in goods markets. Free trade restrictions include tari s and quotas. 2. Openness in nancial markets.
More informationChapter 2 The Data of Macroeconomics
Chapter 2 The Data of Macroeconomics Zhengyu Cai Ph.D. Institute of Development Southwestern University of Finance and Economics All rights reserved http://www.escience.cn/people/zhengyucai/index.html
More informationCH.3 Output and Prices: Evaluating Macroeconomic Performance Measuring National or Aggregate Output
CH.3 Output and Prices: Main focus: 1. Indicators of macroeconomic 2. Measuring output (GDP) 3. Measuring Prices and inflation Evaluating Macroeconomic Performance 1. Rising Living standards Economic growth
More informationUnemployment Rate = 1. A large number of economic statistics are released regularly. These include the following:
CHAPTER The Data of Macroeconomics Questions for Review 1. GDP measures the total income earned from the production of the new final goods and services in the economy, and it measures the total expenditures
More informationEconomics 251 Examination I (100 points) To receive full credit, you must fully explain your answers and show all work.
Economics 251 Examination I (100 points) To receive full credit, you must fully explain your answers and show all work. ANSWER ONE OF QUESTIONS 1 AND 2. 1. For each of the following events, show graphically
More informationChapter 2: The Measurement and Structure of the National Economy
Chapter 2: The Measurement and Structure of the National Economy Yulei Luo SEF of HKU January 22, 2014 Luo, Y. (SEF of HKU) ECON2220: Macro Theory January 22, 2014 1 / 26 Chapter Outline National Income
More informationMacroeconomic Measurements, Part II: GDP and Real GDP CHAPTER
Macroeconomic Measurements, Part II: GDP and Real GDP 7 CHAPTER An Economic Barometer What exactly is GDP? How do we use it to tell us whether our economy is in a recession or how rapidly our economy is
More informationECON 222, Spring 2009 Assignment #1, Answer Key
ECON 222, Spring 2009 Assignment #, Answer Key Question (30 marks) a) This question asks to nd the contributions of the transactions to 2009 s GDP. ou must explain your reasoning behind each of the contributions
More informationEconomic Performance. Sherif Khalifa. Sherif Khalifa () Economic Performance 1 / 55
Sherif Khalifa Sherif Khalifa () Economic Performance 1 / 55 People earning higher income levels also enjoy higher living standards. To judge economic well being, we consider the total income of an economy.
More informationDistance Learning Programme. IAS Prelims INDIAN ECONOMY
Distance Learning Programme IAS Prelims INDIAN ECONOMY CONTENTS 1. Introduction to Economics 5-11 2. Concepts of National Income 12-20 3. Human Development 21-30 4. Poverty, Unemployment & Inequality 31-49
More informationOpen economies also import goods for domestic consumption IM = C f + I f + G f
Ch5 - The Open Economy in the Long Run The International Flows of Goods (Let d and f represents domestic and foreign goods respectively) In an open economy the domestic production (Y ) can be either used
More information2.1 Economic activity The level of overall economic activity
2.1 Economic activity The level of overall economic activity Learning Outcomes Describe, using a diagram, the circular flow of income between households and firms in a closed economy with no government.
More informationChapter 13: Aggregate Demand and Aggregate Supply Analysis
Chapter 13: Aggregate Demand and Aggregate Supply Analysis Yulei Luo SEF of HKU March 20, 2016 Learning Objectives 1. Identify the determinants of aggregate demand and distinguish between a movement along
More informationECON 1010 Principles of Macroeconomics Exam #2. Section A: Multiple Choice Questions. (30 points; 2 pts each)
ECON 1010 Principles of Macroeconomics Exam #2 Section A: Multiple Choice Questions. (30 points; 2 pts each) #1. If the price level in the economy and the nominal wages both doubled, then real wages would
More informationMicro versus Macro PP542. National Income Accounts. Micro versus Macro (cont.) National Income Accounts: GNP. National Income Accounts: GNP (cont.
PP542 Accounting Issues the Balance of Payments (BOP) Micro versus Macro MICROECONOMICS examines how individuals, by pursuing their own interests, collectively determine how resources are used. The key
More informationMacroeconomic Measurement 1: Values and Prices
International Economics and Business Dynamics Class Notes Macroeconomic Measurement 1: Values and Prices Revised: September 25, 2012 Latest version available at http://www.fperri.net/teaching/20205.htm
More informationChapter 2: The Measurement and Structure of the National Economy
Chapter 2: The Measurement and Structure of the National Economy Cheng Chen School of Economics and Finance The University of Hong Kong (Cheng Chen (HKU)) ECON2102/2220: Intermediate Macroeconomics 1 /
More informationMacroeconomics, 3e (Williamson) Chapter 2 Measurement
Macroeconomics, 3e (Williamson) Chapter 2 Measurement 1) The principal printed source for reporting the US National Income and Product Accounts is called the A) Monthly Labor Review B) Survey of Current
More information